H.E.R.O. | The Only Asian SMID-Cap Tech-Focused Fund To Discover & Invest in Innovators of Tomorrow, Today

The Innovators Fund is the only Asian SMID-cap tech-focused fund in the industry. H.E.R.O. stands for “Honorable. Exponential. Resilient. Organization.” and is operationalized into a unique, systematic 4-step investment process to identify the winners.

The investment objective seeks to capture long-term investment returns created by disruptive forces and innovation by focusing on high-quality listed equities in the Asia-Pacific region that ride on and benefit from them.

Through our cross-sector and in-depth fundamental research process, the Fund aim to provide access to companies whom we believe are run by high-integrity, honorable and far-sighted owner-operators with a higher sense of purpose in solving High-Value Problems for their target customers and society, and have unique, scalable and wide-moat business models with sustainable competitive advantages and innovative products, services, and processes to create, expand and service their total addressable market, including the resiliency and balance sheet strength to maintain or grow profitability, pricing power and market positions through up/downturns in the economy.

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Disruptive Trend

INNOVATIVE ASIAN EMERGING SMID-CAP COMPANIES (LISTED EQUITIES)

Potential to double in 3-5 years; 10X compounders in 10 years.

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GUIDED BY PROPRIETARY H.E.R.O. INVESTMENT STRATEGY & 4-STEP INVESTMENT PROCESS

H.E.R.O., which stands for “Honorable. Exponential. Resilient. Organization.”,  is operationalized into a unique, systematic 4-step investment process to identify the winners.

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STRUCTURAL MISPRICING OPPORTUNITY IN SMID-CAP

Under-researched, undiscovered, overlooked and underappreciated.

Intrinsic outperformance not linked to economic conditions, thus offering investors potential de-correlated returns.

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SCALABLE IN FUND CAPACITY AT US$400M to US$1B

High conviction portfolio in 30 to 50 SMID-cap compounders in Asia.

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ELIMINATE FEAR FACTOR OF PREVALENT ASIAN-STYLE ACCOUNTING FRAUD & MISGOVERNANCE RISKS

Proprietary forward-looking fact-based accounting fraud detection system; invited to present to Singapore’s top financial regulator MAS.

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H.E.R.O. Investment Framework & Process to Identify the Winners

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HEAR THE HEART OF THE H.E.R.O. | INSPIRING STORIES FROM H.E.R.O. INNOVATORS OF ASIA

Our clients, just like our H.E.R.O. innovators and business owners, understood the profoundness that it's not about a Maslow-type pyramid that they need to scale upwards in profits and returns; the H.E.R.O. journey is not upwards, but a deeper journey inwards and towards the center, about the kind of person you want to become through the work you build and invest in to serve those you care about.

Deeper and inwards towards the center. As Einstein elucidates: “Strive not to be a success, but rather to be of value” - Amid all of life’s chaos and challenges, a restorative balm to all of us to be Centered in values with focus and purpose to be of value in serving an idea larger than ourselves and the people we care deeply for.

The H.E.R.O. are governed by a greater purpose in their pursuit to contribute to the welfare of people and guided by an inner compass in choosing and focusing on what they are willing to struggle for and what pains they are willing to endure, in continuing to do their quiet inner innovation work, persevering day in and day out.

We aim to penetrate into the deeper order that whispers beneath the surface of tech innovations and to stand on the firmer ground of experience hard won through hearing and distilling the essence of the stories of our H.E.R.O. in overcoming their struggles and in understanding the origin of their quiet life of purpose, who opened their hearts to us that resilience and innovation is an art that can be learned, which can embolden all of us with more emotional courage and wisdom to go about our own value investing journey and daily life.

We like to share some of the inspiring entrepreneurial stories of tech leaders in Asia whom we have been monitoring over the past decade in our broader watchlist of over 200 listed Asian tech companies and our focused portfolio of 40 HERO Innovators who reveal their problems and successes behind building the company.

MonotaRO Masaya Suzuki

Japan’s Largest B2B Ecommerce Platform Handling 15 million MRO Items

“Our logo is like the Momotaro in Japanese folk tale. Like Momotaro, we fight against unfair – the old distribution system." [Momotarō (桃太郎, "Peach Boy") is a popular hero of Japanese folklore and one of the most famous characters in Japan as an ideal model for young kids for his kind-heartedness, bravery, power, and care for his parents.]

"Database marketing is one of the biggest factors supporting strong performance. Through data mining from the user's purchase history and browsing history and analyzing them, the analysis result is reflected in the search algorithm which enhances the search accuracy so that the product can be presented effectively from the range of over 15 million items. We are also doing effective recommendation such as ‘The person who bought the item A is also likely to buy item B. Analysis results are reflected not only in search algorithms, but also in mail magazine distribution and catalog layout, customer listing to ship, increasing the purchase rate. We are trying to personalize the site by personalizing the behavior of each user and by incorporating it into the program. We build a one-to-one relationship with the customer so that each product desired by the customer is appropriately shown. Because our business is B2B, your first priority is a more precise time than price. You can search for what you want in a short time, you can purchase immediately, and your ‘one stop’ purchase arrives quickly. This allows customers to spend time on their original work. This is the reason why we are supported by over 2.8 million customers. "

AS ONE Corp Takuji Iuchi

Leading Specialist B2B Platform in Laboratory Healthcare Instruments and Consumables

“I want to make our company into a ‘good company’, a company that employees can tell from your heart to your most important person, son, daughter, wife, husband, best friend that ‘It is such a nice company, there is no one else!’ It is easy for employees to be feeling that even though the company is stable and there is no big dissatisfaction, there is no sense of fulfilment either. I want employees to feel that their time in the company, where they spend most of their life, is meaningful. To do that, we must first start with creating an atmosphere to express what we want to say freely and vigorously.”

Daifuku Masaki Hojo

World's Leading Distribution Automation Specialist for Amazon

“Special technology is required because the factory or automated logistic warehouse are required to operate for 24 hours in order to raise the occupancy rate. The quality of material handling also greatly contributes to the yield rate of the final product. Our company visualizes factory operation status on a monitor, and monitors where trouble occurred and aims to raise the occupancy rate to the maximum. These technologies have been accepted and adopted by factories in the world's leading semiconductor and electronics companies, data centers, automobile manufacturing, and so on, as the mainstream system so far.”

Kitanotatsujin Kinoshita

Leading Specialist Platform in Hard-to-Imitate Functional Health & Beauty Products

"Our development rule is simple: ‘We only sell once we've created something that's shockingly good.’ “In order to clarify the existence significance of ‘What is our company for?’, we have formulated the management philosophy of our company which has been ‘Meister in the North’ in which we continue to make new fascinating and shockingly good products that cannot be imitated by anyone for the world one after another."

BrainPad Kusano

Leading Big Data/AI and Data Management Platform SaaS Cloud Innovator

"Can artificial intelligence (AI) help keep baby food safe? When Kewpie, Japan’s largest mayonnaise and salad dressing company with advanced modern factory system, asked Google how they can utilize AI to improve their existing human inspection of raw materials such as culling defective diced potatoes in baby food as the conveyor belt is shuttling potatoes at high speed, Google recommended us as their development partner. Diced potatoes used in baby food is an ingredient that comes under most scrutiny in terms of safety since quality can greatly vary across batches of production and packaging. The strictest examination is made of baby food. Even though it is harmless, if mildly discoloured materials are mixed, the mother will feel uneasy. We are doing visual inspection with a quarter of our factory staff. Visual inspection for 8 hours is really tough job. Of course, we tried to introduce an automatic inspection system which is not AI but defects are not recognized. There is something called a color sorting device, but it is very expensive. We utilized Google’s open-source TensorFlow deep-learning library platform and trained the machine learning algorithms to recognize good ingredients by feeding it 18,000 photos and set it to work looking for visual 'anomalies' that hint at sub-par potatoes. The result was an inspection system with "near-perfect" accuracy. Kewpie currently handles more than 400 food ingredients, and wants to expand the AI system towards similar detection with eggs, grains etc. Kewpie’s Ogino said, “In the future, this inexpensive high performance AI inspection technology will be Japan's core competence in food safety and security.”

“I am grateful that my entrepreneurship turned out to be good. When we were listed, an employee said at the celebration, ‘Thanks to the company, I was able to work in the job of data analysis.’ When I heard this message, tears appeared unexpectedly. I was able to make new work and create new value in the world. I was able to contribute to someone's life with that. Of course I was pleased that it was listed, but I am happy that this contribution to someone’s life and creation of new value is more memorable.”

“I am thinking that choosing to be an ‘entrepreneur’ and choosing a profession is not the same. If you think of starting an business because you came up with an efficient business idea, you will not be able to step beyond your strength when you encounter difficulties. I think the sense of purpose is important for entrepreneurship. There is a purpose that I want to do from the bottom of my heart and I work because of that and I think that I can work hard even when it is difficult. In the case of our company, the purpose and mission is to analyze data in this country. If there is such a purpose and it will come true as a means of entrepreneurship, you should take on the challenge. I think that the way will surely open up if you think out and tackle the purpose.”

Transinfo Xia

Xia Shudong 夏曙东 of China's Transinfo Technology 千方科技

“One trend everyone now ignores in the field of ‘smart transportation’ is the future development of the industry. The emergence of big data analysis, artificial intelligence and cloud computing has brought about a comprehensive change in the entire transportation system to solve this traffic problem. The future transportation will be the integration and improvement of the entire transportation system from planning and management to intelligentization of participants. It is not just the concept of cars and roads, but a system of 'people, cars, roads and clouds’. It is the use of big data, artificial intelligence, cloud computing and other technologies to achieve the interconnection of system data, so that data helps cities to think and make decisions, avoid the impact of unexpected events on traffic, and build a traffic environment that is self-regulating and interacting positively with humans.”

“China now views the governance of urban transportation and the improvement of transportation at a very high level. This is not a project for a year or two, mainly a project that lasts for 5 to 10 years or even longer. There will be new changes in our intelligent networked vehicles, and the need for transportation changes to the infrastructure of transportation facilities or traffic information which will also be brought to a new level. Therefore, we believe that the demand for smart transportation will last for a very long time, and these customers have not changed and they are still within the scope of our existing customers.”

“The severe traffic congestion problem provides a great opportunity for TransInfo’s ‘Urban Traffic Brain’ in our comprehensive traffic management or Smart Transportation 2.0 business. Last year, we improved the traffic in Baotou Qingshan District. From the construction of the project to the present, according to the congestion rankings, the results are remarkable. The future demand is very strong. Different from the mature traditional intelligent transportation business, the urban smart transportation business is more diversified and personalized. The contents of the city's smart transportation projects implemented by the company are different. The comprehensive reform plan begins with ‘diagnostic optimization’, such as traffic status diagnosis, route, road, parking optimization, overall solution formulation, front-end sensing equipment installation, and then go through the company’s big data analysis and artificial intelligence platform. The algorithm feeds back to signal control to improve traffic and is an integrated traffic management solution. We have accumulated real-time traffic dynamic data for more than 10 years, our own big data analysis and artificial intelligence algorithms, our own signal control system. TransInfo has been engaged in smart transportation projects for many years, and has rich experience and professional ability to implement projects.”

“The business model of the Beijing Zhongguancun West District project is different from the general project. We won the bid for this RMB 200m project which is about one square kilometer. The bidding adopts the design-construction-operation and maintenance integration. It is not simply equipment stacking and integration, but the integration concept, and developing the solutions to the problems. Data analysis capabilities accumulated by TransInfo for more than ten years of the massive urban dynamic traffic data has become a very big competitive advantage for the company, so this part of the solution is the most important, followed by technology development, implementation, operation and maintenance. There are such needs in the entire 16 districts of Beijing. For example, Yanqing, the 2019 World Horticultural Exposition and the 2022 Winter Olympics will definitely put a lot of pressure on its traffic. This problem exists in all districts and counties.”

“Therefore, in the promotion of Beijing, Haidian's ‘City Traffic Brain’ has been used as a demonstration project for 16 districts in the city. Zhongguancun West District is a very important demonstration point. In the future, we will promote it to the whole city. The model of Zhongguancun West District has a strong replication effect in the city. Beijing's next comprehensive transportation management is not only on the road, but also on the roadside. The urban planning launched by Haidian integrates the entire landscape transformation. The West District of Zhongguancun is now called the Wisdom West, and the road chairs are equipped with charging sockets. Many infrastructural facilities are all intelligent, which also covers the scope of travel intelligence, such as signal control, parking management planning, providing real-time information services, real-time road conditions. The demand for the entire transportation, from informationization to urban governance, has arrived.. The Smart Traffic 2.0 service in fundamentally solving the problem of urban traffic congestion is in the early stage of the breakout, and the prospect is huge.”

“Based on years of industry hard work, TransInfo’s Transportation Big Data Platform has integrated a variety of unique Industry big data resources, covering daily operating data of 10 million logistics vehicles, passenger vehicles, taxis, and average road mileage data exceeding 4.5 million kilometers every day, and integrating passenger vehicle driving position data with a daily average of 10 billion GPS positioning points, and the dynamic traffic information service generated based on these data processing covers more than 200 cities across the country and more than 90% of national and provincial roads. The dynamic traffic data accumulated by TransInfo for more than ten years is diversified and self-collected. It is also interchangeable, covering high-speed and intercity and urban full-field dynamic data. Among them, the heavy-duty trucks and operating vehicle data owned by TransInfo is unique. At present, there are more than 6 million heavy-duty trucks with a capacity of more than 12 tonnes nationwide with operating licenses. We are currently the world's largest car networking company with more than 5.7 million trucks online. In addition, the freight service platform of the Ministry of Communications is built by our company.”

“By the end of 2018, Uniview had built more than 160 Bright Projects, more than 680 Safe City Projects, more than 350 intelligent transportation projects, 625 Safe Universities (including 90% of double-class universities), more than 120 subway lines in 35 cities, more than 50 airports, more than 400 large enterprises, more than 200 top three hospitals, more than 260 highways, more than 240 landmark commercial complex buildings. In almost all major summits in China (APEC, G20, Shanghe, BRIC), historical moments (NPC Meeting, Two Sessions Meeting), in the concert of Jacky Cheung’s concert, there are guardians of Uniview to protect. In 2018, Uniview appeared in the second season of ‘Great Powers’ 《大国重器Ⅱ》TV show, and was highlighted for its Smart City Brain + Facial Recognition artificial intelligence technology which was applied to recover a lost elderly lady among the sea of 100,000 people in 25 minutes.”

[Watch YouTube video from 31:00 to 37:00: https://www.youtube.com/watch?v=enOHxoyhN6s]

Weaver Wei

Wei Lidong 韦利东 of China's Weaver Network 泛微网络

“Our OA artificial intelligence voice assistant ‘Xiao E’ 小e was launched in Apr 2017. The user sends voice commands to realize various application functions of the system such as queries, scheduling, etc; innovative functional cloud applications to organize the last-mile of paperless office such as automation of expense reimbursement, contract management, budget management, attendance management, etc. Through ‘Xiao E’, Weaver users can carry out instant completion of transactions that may take one or two days to complete in the past, such as travel application/booking/approval, expense reimbursement, voucher processing; quickly search related documents; quickly build approval processes without IT involvement etc, realizing automation in the daily processing of daily trivial work to make full use of the fragmentation in time to deal with administrative affairs and improve the efficiency in the daily management process. If you encounter technical or product problems that you don't understand at work, ‘Xiao E’ will give answers based on the relevant knowledge and experience accumulated by the system, and recommend which colleagues in the company are most suitable for such problems. If users want to know the company's sales and operational performance, ‘Xiao E’ will provide the performance data and the comparison of the same period and other analysis. If you tell ‘Xiao E’ that you want to visit the customer on a business trip in Beijing on Monday afternoon, ‘Xiao E’ will automatically set up the day's schedule, and whether there is a conflict, and remind the matter at the appropriate time. During the customer visit, ‘Xiao E’ will automatically identify the path and identify other customers whom you can visit along the way. At the end of the meeting, ‘Xiao E’ will quickly sort out the meeting minutes and automatically assign each person's tasks.”

Thunisoft Shao Xue

China’s #1 Software-Artificial Intelligence Leader in “Smart Judicial Court”

“‘Judge Rui’ 睿法官 uses artificial intelligence to simulate real judges' thinking to complete a series of accompanying and precise judicial trial affairs, and supports judges to put more time and energy into the judicial trial work. For example, Judge Rui can automatically sense the judge's behavior information, collect information in real time, grasp the habits and rules, help the judge to automatically archive the file, automatically fill in the case information, carry out the file review, sort out the focus, automatically create and generate the judgment document according to the case, give sentencing suggestions, automatically generate court trial outlines, automatically remind laws and regulations during court trials, and uses court-recognized speech recognition as if it were an online senior judge assistant. Judge Rui has won widespread recognition from users and the legal profession.”

Benefit One Norio Shiraishi

"The Internet Cosco in Employee Benefit Services"

“’Creating distribution of services.’ This is our company’s vision consistent from the foundation. If Costco is the leader in distributing goods at warehouse stores with the membership system, our company strive to be the innovator in distributing services through a membership Internet mall."

“A personal mantra I care about is ‘Every day effort, reflection on the day.’ Reflecting is an act that you cannot do unless you objectively view yourself. People do not know about myself. Especially when it succeeds or when things are going well. I look back on the events of the day and my actions, reflect on the points I did not reach, and strive for improvement. I think that it is very important to keep moving forward. I think that people with high reflection ability are able to do it. Since I have an optimistic personality, I try to be conscious as a commandment to myself. Because we forget that when we are unconscious. Conversely, it may be my biggest weakness, isn’t it?”

Appen Mark Brayan Vonwillers

Mark Brayan, Dr. Julie and Chris Vonwiller of Australia's Appen (ASX: APX)

“There are three key components in successful machine learning: compute power, algorithms and the right data (and lots of it). In order to learn, software ‘machines’ such as speech engines, search engines, predictors and recommenders, must ingest vast amounts of data to help them find patterns and predict outcomes. The greater the volume and the higher the quality of the volume and the higher the quality of data applied, the better the machine learns and performs. And the data is where Appen comes in. The data that the machine learns from has to be collected, prepared and delivered into the technology. Data truly is the ‘unsung hero of artificial technology.’ The increasing demand for data for machine learning and Appen’s scalable capability for the provision and structuring of high quality data for places us in a very strong position for future growth. We’ve been doing it for 22 years, so we’ve been a major force of improvement in the industry, helping to evolve AI to where it is today. In some cases, we work with our clients to use or ‘decorate’ their data to improve their systems, as is the case with our search engine projects. In other cases, Appen captures and prepares the data for our clients. For example, language and speech data is especially important when you’re training AI to interact with people—and we’ve worked in over 130 countries, in over 180 different languages. We’re really an established expert in the field.”

“Appen’s secret sauce is our crowdsourced model. We farm out tasks to between 30,000 and 40,000 people every month, who each get rewarded for helping train the company’s machine learning capabilities. If there is any challenge for us, it’s finding the right amount of ­humans to do the work. The artificial intelligence that we provide data for is generally AI that mimics a human function. So speech, sight or some sort of complex decision. Consequently, we use humans to build those data sets. We’re providing working opportunities to 30,000 to 40,000 people every month. And they get rewarded for it. We’re providing job opportunities for people who can’t get a job, or can only work at home. That’s a really positive side ­effect of our business, supporting these people.”

“Society was approaching a tipping point for the use of voice to become a regular interface with technology, and Appen was well positioned to benefit from this. We are fast approaching an inflection point for the mainstream use of voice as an interface with computing devices, and utility of products such as digital assistants will be dependent on quality training data from companies like Appen. It's estimated that by 2020 at least 50% of all searches will be through images or speech."

“Voice is becoming a more common way to interface with technology. We’ve gotten used to the idea with our phones: asking the built-in virtual assistant for directions, to search for things, to play music. Now more people are using voice recognition technology with at-home assistant devices (like Amazon Echo and Google Home) that can answer questions and help you with simple tasks, including basic online shopping. Because they’re all based on machine learning, the more we use these services, the better they get. The more they learn, and the better able they are to recognize the voices of the people who use them. They store information about what questions you’ve asked in the past, what you’ve bought. As they improve, they’ll become more useful and a bigger part of our daily lives.”

Koh Young Koh Kwangill3

Dr. Koh Kwangill 고광일 of Korea's Koh Young Technology (KOSDAQ: 098460)

“The inherent DNA of Koh Young's members can be called the unwavering spirit of challenge. Koh Young challenges the products that are not in the world. It is a strategy that we create the markets. To develop a product that is not in the market is going to a path that no one else has. We hate doing what others do. When we entered the robot industry, the US, Germany, and Japan have already been doing this business for 20 to 30 years. We make robots that go beyond the products of advanced countries and sell them to the world market. Fortunately, test equipment is software rather than hardware. Software and 3D machine vision architecture technology for accurately measuring, recognizing and processing vision data of arbitrarily shaped objects with various reflection characteristics at high speed in combination with robot technology and AI. This field is our industry's future. Koh Young's success in developing the 3D SPI for the first time in the world was like a miracle. We walked our whole life.  The experience of product development success is embedded in the organization and is the force that keeps it going. In markets where there is a new product, we shook the market order to make first place, and if there is no market, we are willing to create a new market.”

“Robots are the ‘guns’ of the 4th industrial revolution era. Companies that cannot get on the Fourth Industrial Revolution will die. We invested in AI for three years, and we're already making a difference. It's a combination of robot and AI. Koh Young introduced a new equipment that reduces the defect rate by analyzing the type of defective product by connecting the production equipment of electronic products to the inspection machine network and analyze in real time whether or not the production process is abnormal. Customers were surprised. If you do not want to follow your customers for the rest of your life, you have to move your customers beyond expectations."

"Koh Young has developed a brain surgery robot based on 3D measurement technology. Koh Young has developed a navigation sensor for brain surgery that displays the environment in the brain with 3D vision technology and developed a medical robot for brain surgery. As a brain surgery robot, it succeeded in miniaturizing the equipment by attaching it to the operating table for the first time in the world. Currently, micro-area surgery in the field of otolaryngology and neurosurgery diagnoses lesions based on pre-operative medical image information. It is impossible to completely avoid excessive incision or radiation exposure. The solution to these problems is our surgical guide robot system using a miniaturized multi-degree-of-freedom robot, medical image-based navigation software and high-precision 3D medical sensors. The combination of 3D sensor technology and robotic system on magnetic resonance imaging (MRI) and computed tomography (CT) images of the patient's brain region. Our robot system is expected to minimize the damage to the human body through the shortest path surgery and ensure the safety of the operator and the patient at the same time, so that the accuracy of the procedure and the success rate of the operation can be significantly improved. We will continue to create new value in the medical field by combining medical diagnostic equipment and 3D technology. We have always been thinking of making the best products if it is not the first product in the world. We will make a company that can stand the number one position in various fields beyond the testing equipment market.“

“My management philosophy is to not recognize people as cost; that the employee is a dream partner with the CEO; that a human company, a brilliant company succeeds and that sometimes you need a reckless challenge. The secret to overcoming recession is that there is no recession in 1st place product and Koh Young makes product and offers solutions that are the only one and best in the world.”

"It is love in the end. Not only does it require loyalty as a member, but the company must also love people. That's how we pair. Those who devoted their lives to Koh Young, I am going to pay attention to how these people are responsible for their lives.“

UUUM Kazuki Kamata

Kazuki Kamada 鎌田和樹 of Japan's UUUM Inc. (TSE: 3990)

"セカイにコドモゴコロを (Sekai ni kodomogorokoro wo) - This is UUUM's corporate philosophy, and embodies our desire to create unprecedented enjoyment through ideas that embrace a childlike spirit and bring new experiences to people. UUUM is a company that started with the encounter with HIKAKIN, but now it has developed into the largest creator network in the country. The top class content creators have millions of subscribers, and the individual became the media. On a daily basis, we take on the challenge of delivering new experiences to the largest audience possible by leading a new era of entertainment, where content accepted by like-minded fans is created as an extension of what our creators and employees like and enjoy in the video domain and beyond.”

“Compared to the time I was a child, the manner of content consumption of young people has changed greatly. In the past, in the screen called TV, there were heroes called ‘celebrities’ and we sat down in front of the TV according to the broadcasting time decided by the TV station. But for today's young people, the heroes are changing to YouTuber, and television is changing to smartphones. When TV was the most dominant media, people wanted to become like a star on TV. Now, YouTube has become the media that people regularly watch and through which they encounter the stars they are struck by. Also, they are able to choose the time and content of watching as they wanted. UUUM's numbers are good with such a background in these times. The number of channels was 1,141 in 4Q2015 which increased to 5,877 channels in 4Q2018, a rise of about five times in 3 years. Total number of views over the three months also increased from about 2 billion times to about 9.5 billion times in the same period, also nearly five times more.”

“UUUM was able to make this area a business by building a revenue base from advertising revenues from YouTube to tie-ups with companies and movies etc. In other companies, there are about 1 or 2 people in each office. One factor is that we have made efforts to increase the number of famous creators in the unit of 100 people and even 1000 people. The fact that we have made early investments to strategically acquire powerful creators in anticipation of the next cycle has been a factor of growth. Although this area has been said to have low entry barriers, we made a situation where we made a major investment in acquiring talent in our early first phase of growth and now we are at the second phase stage, making it difficult for new entrants to participate and we are focusing on cooperation with business partners.”

"After various experiences from shop management to business alliance, I had a lucky encounter in 2012 to speak with my mentor Mr. Taizo Son, who is the CEO of venture investment firm Mistletoe, founder of game maker GungHo Online Entertainment, and the youngest brother of Softbank’s CEO Masayoshi Son. Mr Son advised him to start my own company. My second life began thanks to Mr. Son. Another turning point came after I left the mobile phone firm in 2013 and got in touch with HIKAKIN, an old acquaintance. HIKAKIN was already in the spotlight after one of his beatboxing videos earned him a live appearance at an Aerosmith concert. When I learned HIKAKIN actually performed together in Singapore with Aerosmith’s lead singer Steven Tyler, I thought for the first time that I could actually make a business out of doing YouTube. At first, I was thinking about running a direct shopping business on YouTube, similar to what the TV-based retailer Japanet Takata does. But when I learned that HIKAKIN was struggling in his business negotiations with various companies, I began to think that haggling was not something creators should be spending their time on. That prompted me to start UUUM with HIKAKIN, now the company’s top adviser, to support YouTubers so they can concentrate on producing videos. In addition to HIKAKIN, I also asked some top creators. There is a feeling that ‘they want support’ among them. Celebrities in showbiz don’t sit down at a negotiating table and directly ask their sponsors how much they will pay. But no company played a role in managing YouTubers’ talents before UUUM arrived. The prototype of ‘a company supporting the world's most individual creators’ was thus born. The UUUM business that manages creators is living my experiences gained in general affairs and operations which was the cornerstone of support capabilities for current creators."

“Entrepreneurship is not that easy. When I became an entrepreneur, I realized that the business is not born suddenly, the founder must constantly sow seeds. When I am unlisted, when I receive a loan, everything including my personal life will be pledged as collateral. The risk is big. It was when I borrowed 200 million yen from the bank that I first felt the risk. I thought that I had the courage, but I had something to give to take that kind of risk. I do not feel like doing business, I am doing business because I want to do what I want to do, to make it possible for the creators and friends to do their best in the community, doing the necessary work in management support, legal affairs, and so on. A lot of people ask me when I started thinking about an IPO. But I never thought about when to take my company public. I just wanted to be a help to creators by supporting their process for making something they like into a job. It was just the result of pursuing something I like myself.”

“Top and emerging creators are coming to UUUM where creators exchange know-how closely to become an excellent creator. Also because UUUM is a mass of know-how. When it comes to business negotiations, individual YouTubers have struggled to manage their contracts with companies while focusing on producing videos. In addition to providing professional video staff and editors affiliated with production companies, UUUM offers YouTubers the accumulated knowledge of how to create popular works, manage legal matters including video music copyright issues, and consultations for raising the social recognition of our creators. In the past, when you wanted to appear on TV, entering the entertainment office was the path. But on YouTube, the path is decided by yourself. You can do activities even if you do not belong to the office. But when we want to aim for scalability and sustainability, various problems such as legal affairs have come up, and individuals have limitations. UUUM has support capability there. We are constantly listening to what the YouTubers’ needs and their troubles and refining the service we offer, so we are proud that we understand YouTuber best. If you catch a cold, I will send cold medicine.”

“Due to the popularity of creators, companies that ask for tie-up jobs are increasing, regardless of company size, major companies or SMEs. The business negotiation story usually goes like this, ‘Watching videos are increasingly popular, how much is it to engage HIKAKIN by the way?’ Since we are not making a price list, we will ask about the details of the product, the purpose of the promotion, the assumed target and so on and make various adjustments on that. Even though creators work with companies, YouTubers maintain their creative freedom. YouTubers working for UUUM create ad videos for clients, but the clients don’t have control of the story line. The YouTubers may not even favor the products they pitch. If YouTubers find products to be useless, they honestly say that in their videos. We ask client companies to be aware of this. No matter how big your company gets, I will not ask for stability or just ask for sales. What is fundamental is respect for the creators and ‘favorite things’ created. I hope creators can make use of the UUUM platform and environment well and make fun and good things with one another. If you work, you want to laugh and work.”

"Because new things are treated as ‘smelly’ generally, I think that we should push forward to what we thought was good and ignore such voices. YouTuber was also seen as a doubtful and fad thing at the beginning. Japanese people think YouTube is merely a platform for individuals to earn advertising revenues. They tend to consider the YouTuber phenomenon as just a passing fad. But the tide changed instantly since the news article that was published on the survey of elementary school student on what do they want to be in the future when they grow up and YouTuber was ranked as one of the top occupation choices. What we are trying to push is the momentum, so that the majority of Japanese people, including seniors and females, are familiar with YouTube and watch it regularly. When core fans are attached, there is transmission power. When the management philosophy is properly listed, the culture and direction of the whole enterprise can be decided. That's why I wonder what we can contribute to the world. 'Kodomogorokoro' means that you want to positively influence someone by making moving images, videos, a creative output, so that he or she can remember such things as 'that time was exciting and interesting', 'that time was heartwarming', express this in 'sekai' (the world). Start from the point that I want to give something, to do something, to 'kodomogorokoro' something."

“UUUM’s strength as a Tokyo-based creators’ content platform lies in our abundance of Japanese content and demand from overseas fans fascinated with subcultures ranging from anime and manga to more traditional interests, such as washoku (Japanese cuisine). In an era where information spreads quickly through social media, content can naturally travel around the world, crossing national boundaries. The next step we would like to take is to produce content that fascinates not only audiences in Japan, but those overseas as well.”

Rakus Takanori Nakamura

Takanori Nakamura 中村崇則 of Japan's Rakus Co (TSE: 3923)

“RAKUS is the provider of cloud services which improve business efficiency of small and medium-sized enterprises. There are approximately four million SMEs in Japan. But their business management resources, such as budget and personnel, are limited compared to big companies. In addition, many SMEs don’t have dedicated in-house IT system specialists. Therefore, they are behind in introducing IT and improving operational efficiency. RAKUS has contributed to SMEs’ growth by providing user-friendly cloud services which SMEs can easily adopt. We also dispatch the IT engineers we have nurtured to those SMEs which have a shortage of IT specialists and help them flourish. Our corporate mission is ‘We strengthen SMEs through IT.’ A vast majority of companies in Japan are SMEs and there are four million of them. There are only a handful of large companies such as over 5,000. SMEs employ more than half the workforce of this country. What Japan needs to keep its society safe and prosperous is stronger SMEs. In order to make the future of Japan brighter and more prosperous, we need to improve the work and the lives of people working at these companies. We believe that IT technology exists for that purpose. RAKUS provide SMEs with information technology which is usually used by large companies. We would like to contribute to the utilization of relatively inexpensive IT power Moreover, we have been improving on a daily basis the technology we offer so that SMEs can use it more easily with lower costs. The company name RAKUS comes from the word ‘easy’. This includes our wish that IT systems can be used comfortably and that people working in small and medium enterprises will enjoy work and life as well. It is a great pleasure that we can contribute to SMEs’ business growth and to the well-being of their employees.”

“Overtime characterized Japan. Although the Abe administration is discussing issues from various perspectives, including raising workers' ways of reform as the biggest challenge, the question is how can each company overcome long-standing labor practices? So what I am hoping for now is to make smart operations like using cloud services. What we really are offering is not a system to increase efficiency but ‘mind-richness’. When people can spare time, the heart will be enriched. You can also be kind to people if you are rich in heart. Reducing wasted time will increase the time to think about the future. It is our mission to create such a society that takes care of how efficiently we can create time with ‘easy’ as a keyword in our way of working as well as thinking to offer a better service to the customer.”

“After graduating in business administration from Kobe University, I joined Nippon Telegraph and Telephone Corporation (NTT West) in April 1996 and worked mainly in the sales field. I saved 20,000 yen every month as capital for the establishment of the joint-stock company Digital Networks in 1997. I studied programming on my own. With five friends, we are writing websites and writing programs at friends' home after NTT's normal duty on weekdays and on weekends and devoted ourselves to development. Back then was the beginning of the internet. The Internet has not been widely used in general companies, and there was no email address. Meanwhile, in NTT, everyone has an e-mail address, and there was a training to write HTML and we were developing a free mailing list service. I left NTT in about two years to concentrate on the project. In 2000 the company name was changed to Infocast in Jan 2000. We got funding of 100 million yen from the venture capital firm JAFCO. We achieved over 400,000 users for our mailing list service. We later sold Infocast to Rakuten Corporation in Oct 2000 after Yahoo Japan started acquiring competitors one by one. I established Rakus in November 2000. At the beginning of the establishment, I operated an IT engineer school to train engineers. I devised teaching materials during the day and I was writing programming at night. However, because the market size is very small, the fixed cost is large as I need a classroom and some lecturers, and it is a labour-intensive business, it has been difficult to keep on it for a long time, especially if the number of students decline. So, we dropped the profits gained from the school business. Employees quite disagreed with the decision to stop the school business in 2006 which had achieved 200 million yen in sales, accounting for 40% of the total sales then. Because we had a steady profit then, we did not feel the necessity of closing. However, as an entrepreneur, we have to look not only at profits before the eyes, but more importantly look to the future potential. It seems that this point did not quite get to other employees. I stopped recruiting new students. It took about a year and a half to withdraw completely.”

“Interestingly, I think that there was a tendency that many entrepreneur-oriented talented people were adopted more often at the time I joined NTT West. That's why there are so many people in sync, and if you noticed, there were five people synchronizing together to make a company. No doubt I had a lot of luck to have joined NTT West by the dawn of the Internet. I think 80% of the reason that have reached where we are today is due to that.“

“The purpose of the earlier school business was to create a useful IT engineer. Derived from that, I thought that we should focus on what to do next, using that engineer to create what is useful. We shifted the axis of our business to training and dispatching IT engineers, and we began offering our own various cloud services. One of the services we developed is a mail sharing and management system called Mail Dealer that is currently used by more than 5,000 customers. The Mail Dealer was initially in the red, but because it was profitable in the IT engineer dispatch business, I could invest for long-term growth. Our strength is to adopt a system that hires inexperienced people and develops them into engineers specialized in JAVA and dispatching them to web service providers. With this strength, we can develop new services by our abundant in-house technicians and engineers. I also learnt about the importance of advance cash flow earnings. Once a deal occurs, you can continue to trade with that customer - this will lead to stable business. The current SaaS business is consistent here.”

“The turning point of my life was when I was 27 years old. I felt keenly to protect my health and not continue with unreasonable way of work. The consciousness has changed to working more efficiently, and it also serves as the basis for service development and our current working way. We were focusing on SMEs as our customers for the cloud-based services for two key reasons. One thing is that a major IT company is reluctant to sell to SMEs, which is troublesome due to support for the amount of dollar sales achieved. Another is a sense of mission that we can help improve the quality of life of people working in SMEs who are lagging behind in IT if they introduce the cloud services. The company name RAKUS was named from the desire of ‘making it easier for customers’ to improve the efficiency of corporate operations. I would like to offer open technology and cloud services as used in large enterprises at low cost to SMEs, so that companies will grow by improving work efficiency and contribute to the further development of Japanese society. We cherish how we can efficiently produce time. For that reason, I think that I can work out with my friends who can devise and devote more effort with ‘easy’ as a keyword in my own way of working as well as thinking to offer a better service to the customer.”

“I always try to consciously say ‘I am wrong’. When you become an entrepreneur, people around you usually do not point out your faults and problems to you. That's why I think it's dangerous if you do not rule out yourself as wrong’.”

“Before existing businesses become useless or less relevant when the flow of the world is so fast, we need to sow the next seed, to make investments and foster the next generation of business. If you do it, as soon as you notice that there are cliffs, you can stop and change direction. When I am profitable I will sow the next new seed.”

Enigmo Suda2

Shokei Suda 須田将啓 of Japan's Enigmo Inc (TSE: 3665)

“Even if one is not a professional buyer or stylist, there are many people with a fashion sense. A housewife who lives in Thailand sold a gorgeous swimsuit at BUYMA which became popular and was taken up as a fashion magazine and became a hit item. Bottom-up realistic trends are born from ordinary individuals, not from top-down brands and magazines. BUYMA is a mechanism that overcomes conventional common sense and democratizes fashion. Personal shoppers of over 11,500 people in 145 countries worldwide will find and introduce fashionable items, international limited models, items unavailable in Japan. To buyers who are interested, just say the preferences of size, color, styling, and personal shoppers propose the perfect product and send it out. Imperfections and troubles are resolved by the personal shopper and the management staff of BUYMA. Since the real thing surely arrives, high-priced brand items can also be purchased with confidence. The personal shopper's communication is pure and bustling, unlike a store clerk who is weighed down by the store's inventory and sales. The buyer can see the products picked up from all over the world, meet personal shoppers with a fashionable sense, and enjoy the unprecedented shopping experience and ethos of ‘Style looks better when it’s Personal.”

“Regardless of the place of birth or career, BUYMA realizes the dreams of 115,000 people and creates employment. Editors who are active in the front line to BUYMA which trend information of each country will upload attention to recommended products as well. Professionals created a media called STYLE HAUS and broadcast real trends of BUYMA. Items that are quietly sold in a corner of the world without capital strength, so that good products gather support and become hit products. BUYMA can now be sold anywhere in the world. Both the language barrier and the national borders are crossed, and the sellers and buyers who have fashion sense connect with each other. We receive "Thank you" notes from members to personal shoppers for liking, for selecting and delivering the product. We will share that feeling, nurture trust and expand happy shopping experiences. The world in which really good products and experiences are exchanged gradually becomes peaceful. Even when the relationship between countries can be difficult, the connection of BUYMA is fun and certain. With only one mind, there is no distinction and really good products and experiences can be sold. You can buy the most delightful thing from all over the world at just right price. Drawing personal fashion sense and hospitality, BUYMA connecting goods and feelings is a flow that changes the world, and it becomes a new mainstream.”

“The personal shopper is a specialist who supports shopping so that you can enjoy shopping even more by catching the latest trend information with your sense and sensitivity and introducing styling and items according to customer's taste. BUYMA creates new value for shopping services by hospitality-filled services of individual shoppers active all over the world. If the typical auction site is a flea market that sells unnecessary items, BUYMA is a focused specialty fashion shop with the items selected by personal shoppers with fashion sense. If you become a top personal shopper, you can get more than 200 million yen in sales each year, and some housewives earn more than your husband. Because BUYMA does not have a store and does not involve intermediaries, products can be offered at a reasonable price. Also, since the principle of competition among personal shoppers works, we are able to realize reasonable price. Everyone involved gets win-win with each other and the business model will rise in sales. Personal shoppers are happy if they make money, buyers are happy if they can buy it reasonably at the local prices. As fashion goods are expanding worldwide with small lot varieties of various kinds every season, it is very difficult to cover all of them with a single company. We can cover it by using social power. Also, until now, there was no choice other than to give up out of stock, out of size, hard-to-find items. With BUYMA, we can virtually integrate stocks scattered throughout the world by procuring personal shoppers scattered around the world in 145 countries locally, greatly increasing the opportunities for consumers to obtain them. In collaboration with personal shoppers all over the world, we have an assortment strategy that reflects Japanese trends, a personal shopper relation that acquires and educates personal shoppers, an SEO system with specialists who display high rankings in search engines, collaboration with entertainers and models. By enabling social media marketing, thorough PR system for magazines and TVs, low-cost operations that make full use of social, marketing, and technology, it is possible to efficiently expand the scale of transactions, realizing high profitability. Because it is C2C, there is no correlation between fixed costs and sales, and if the amount of transaction increases, the profit margin will rise. That is why sales must not be raised unless they are able to sell goods, and marketing skills have improved so that personal shoppers can also create relationships that will make such products available.”

“There are no other sites with a large number of fashion brands and individual members in the world are supporting it, which is also a strength of BUYMA that other companies cannot imitate quite easily. Creating a network of over 115,000 local sellers in 145 countries around the world is not a thing that you can imitate overnight. Since the externalities of the network will work after the marketplace is created, sellers wanting to put out as much as possible to more buyers, and buyers want to buy more where there are more quality items. While taking advantage of this strength, we are planning to put more emphasis on overseas expansion from now on. I would like to gradually expand into the field of beauty, lifestyle-related and interior goods.”

“BUYMA is not a site that you can easily sell if you put out goods. The quality of goods is high, and it cannot be sold unless it is properly selected. Looking at such a characteristic, it can be said that it is closer to B2C where the personal shopper is a semi-pro rather than pure C2C. Both C2C and B2C sites tend to have problems in counterfeit goods, but there are no cases of fake product at BUYMA. Firstly, when the buyer click purchase, the price is temporarily kept by the company in an escrow system, and payment is confirmed to the seller after the product arrival is confirmed, and there are no money or product troubles. Importantly, I have built a mechanism that leads to more sales as I trade deeply. In the normal auction site, user evaluation also has only ‘good’ or ‘bad’, but BUYMA further breaks it down and evaluates some points that users are concerned about, such as ‘beauty of packaging’, ‘quick response’, etc. If it is low, the overall evaluation falls and it will not sell; if it is high, it will sell. Evaluation is made visible, so you can improve it yourself, so that the service level of BUYMA will rise steadily. The last decision is made by the buyer. Evaluation from buyers is the most important, and personal shoppers with high evaluation are put it in a prominent position on the site as soon as a premium personal shopper, so that they can be active in a more easy-to-sell environment. The personal shopper is trained by Japanese consumers who are very discerning in quality, so the level of fine care such as inspection and customer correspondence is very high. In addition, we have a compensation system for counterfeit goods, damaged or lost products, etc. Since Nov 2014, we have a ‘Return Guarantee System’ not only due to a difference in size of the delivered item but even if the product is different from the image on the site. We also provide services, customer support in case of trouble. We maintain such Japanese quality. We provide services in English as well. Our company's policy is ‘to enable good people and good service providers make earnings’. Good user-rated items are sold, regardless of advertising costs. As we become an evaluation society inspired by social capitalism, I believe that the policy of BUYMA is consistent with the times. We are implementing the ‘BUYMA AWARD’ which chooses the best personal shopper. Based on a questionnaire from buyers, we evaluate not only sales but also added value.”

“Enigmo has a seven-part management philosophy called ‘Enigmo 7’:  ‘Be a trainee!’, ‘Aesthetics for work!’, ‘Grasp the essence!’, ‘Open!’, ‘Following real!’, ‘Obsessed with results!’, ‘Limit exclusion!’ Article 1 is ‘Be it a trainee!’ This has been my common values with my colleagues at Hakuhodo when we co-founded Enigmo. Even during my school days, even after becoming a person working in the society, I secretly sneaked into the habit of a newcomer. I jumped into the canal with my suit. Even after entrepreneurship, I do not seem to have changed my essential character, like doing a 250 kilometer marathon in the Sahara desert or the Amazon jungle, triathlon in the Antarctica. I think that it is necessary for a venture that keeps challenging difficult and new things. Although I have grown almost steadily since I started Enigmo, I believe this year 2018 is the year of preparing for various stages towards the next stage. This year will be the one year that marks a turning point when I looked back.”

“Whenever you always do new things, you will definitely come up against the opposite opinion. I think that it is very important to do something new, because otherwise nothing can be done. If you really care about it, do not be afraid of criticism for what you think is right.”

"It is important to keep passion and have calm eyes. To challenge something new, passion to prepare for some risk is essential. However, passion alone is not enough, it is also necessary to have a calm look at the situation in which you are placed. By doing so, you aim for a goal while struggling and you come to be able to do it.”

Grace Tech Matsumura

Koji Matsumura 松村幸治 of Japan's Grace Technology (TSE: 6541)

“The origin of Grace Technology was a company founded in 1984. This was the very first company in Japan to specialize in producing manuals. Unlike a mere production company that just creates a manual, we are a proposal-type problem-solving company that will not only improve the quality of manuals, but also drastically reduce costs related to production, and even reform the client’s system. During our 30 years of experience in the industry, we have gained trust from many major manufacturers with our solutions, especially focused on technical manuals. Although this may not be a well-known fact, the market related to manuals is actually very large. Manufacturers cannot survive without creating new products, and these products always need a manual. According to certain estimations, the size of the market only for Japanese listed manufacturers is about 7 trillion yen. In recent years, the shorter cycles for new product releases, and the improved performance and functions of products is continuously increasing the information that needs to be covered by manuals. In addition, the globalization of the product market has expanded the needs for manuals for other countries. Some products may require up to 30 to 50 types of manuals in English and other languages such as European languages, Arabic languages, and Asian languages.”

Grace Technology is Japan’s leading e-manual database software-as-a-service (SaaS) innovator expanding into its revolutionary patented AI/AR-guided manual smart glass “Grace Vision” (registered patent no. 6321879 received in May 2018) using Microsoft Hololens. Grace Technology focuses on technical manuals for complex B2B applications serving over 1,700 manufacturers & IT companies that include Fanuc (one of the world’s largest makers of industrial robots), Toyota, ABB, Advantest, Agilent Technologies, Applied Materials, Atlas Copco, Bosch, Bureau Veritas, Canon, Dell, Dassault Systemes, Emerson, Harmonic Drive Systems, Heidelberg, Honeywell, IHI, KLA-Tencor, KUKA, Kurata, Nvidia, Qualcomm Japan, Park Systems Japan, Pitney Bowes, Sandvik, Saint-Gobain, Samsung Japan, Siemens, Sirona Dental Systems, Teradyne, Texas Instruments, Thales, Thermo Fisher Scientific, Tokyo Electron, Trimble, Xilinx; Apple, Autodesk, Citrix, EMC, ESRI, Fortinet, Intel Japan, Oracle, SAP, Trend Micro, Wipro, etc. Grace Technology specializes in the technical maintenance manual of critical industrial machinery of manufacturers from the computer control system of the nuclear power plant to the trajectory control system of the satellite, biotechnology and pharmaceutical inspection scientific equipment and robot engineering, an area with low competition because of the high industry expertise and knowledge required. Compared to the estimated potential market size of 100bn yen, the current market share of Grace Technology is less than 2%. With the compellingness and circumspection exponential edge in solving headaches for its customers to result in substantial cost and time savings, Grace Technology’s SaaS business model generates stable and recurring monthly subscription revenue (based on the data capacity of the manual and the number of users), achieving a 103% and 229% absolute increase in sales and operating profit in the recent 3 years with EBIT margin of 30.8%, positive free cashflow margin of 22.0%, and ROE (= EBIT/ Equity) of 37.9%, propelling a 388% increase in market value since its listing in Dec 2016 to US$278m. Grace Technology’s cloud-based portal site enables users to centrally manage, edit and distribute digitized manual data with user-friendly functions that include its patented “Term Filter” (patent no. 5696280 “Linguistic system and language consolidation program and term collection method”) that allows users to convert technical terms regardless of when or how they are written and replaces all technical terms that need to be unified based on the glossary. The e-manual cloud service also enables on-demand printing service to reduce logistics and warehousing costs, as well as the online ordering and purchasing of component parts linked with the maintenance manual to the EC site. Grace Technology’s MMS (manual management system) e-manual SaaS business contributes 66% of sales and 57% of profit. A key strength of Grace Technology in winning clients such as Fanuc and Toyota is its consulting know-how based on its deep understanding of manuals cultivated from over 30 years of experience. Its MOS (manual order-made service) consulting business  accounts for 34% of sales and 43% of profit. Like Keyence (TSE: 6861), Grace Technology commands a high-profit structure by business model design in adopting a “fabless” business model, outsourcing most of the non-core labour-intensive manual writing to 40 external partners, concentrating on the higher-margin front-end design, planning & consulting solution-proposing business and the SaaS-based e-manual database management, thereby positioning itself at the apex of the fragmented manual industry of around 2,500 manual translation companies and differentiating itself from conventional lower-margin manual companies with non-recurring revenue model such as CDS (TSE: 2169), CMC Corp (JQ: 2185), Honyaku Center (JQ: 2483), Crestec (JQ: 7812), etc, who are increasingly being relegated to “subcontractor” status. Grace Technology was the predecessor of Japan’s first specialized manual production company Japan Manual Center Co Ltd founded by Koji Matsumura in 1984 which was merged in 2008 with Grace Technology.

“We are trying to switch from ‘reading manual’ to ‘viewing manual’ while using movies and audio. Grace Vision is the ultimate AI manual that anyone can use easily, which does not need the user to see nor memorize tens of thousands of pages of manuals, not only in Japanese and English, but also in any language. We want to escape from the conventional manual that has bothered engineers so far and have AI to monitor and guide the worker to prevent mistakes and complaints, and to shorten the training period for new workers. e have over 30 years experience in preparing manuals entrusted by manufacturers and we incorporated our existing product of cloud 'e-manual' know-how in AI and developed Grace Vision with AI-related companies. Grace Vision is possible only because we know the manual. We are familiar with where to watch out and what kind of warning should be given. With this know-how, you can input 100% of the necessary information to AI, so that 100% guided manuals will be possible.”

“The AI recognizes the motion with the camera installed in the dedicated glasses and instructs the work by displaying the instruments and instructions on the operation procedures with guided arrows etc. on the spot in AR display. If unknown points occur with the guidance of AI, you can ask AI through the microphone installed in the glasses and you can proceed with the conversation. Also, if an engineer makes a mistake in work, the AI points it out. By introducing the AI manual, troubles such as complaints, mistakes in operations, accidents, etc. can be drastically reduced, and the period of educating maintenance work for newcomers is reduced to less than a third. With optional functions, the health condition such as the worker's pulse and body temperature can also be measured, leading to prevention of accidents due to poor physical condition.”

“In the field of maintenance, it took time to educate the workers who need to check the manual each time if there was an uncertain point, and ask the manufacturer about the trouble. Grace Technology has pursued the ultimate manual that is easy to understand for everyone so far. High performance in complicated shape recognition is also a big feature of Grace Vision. There are many kinds of parts used for maintenance work, and many parts are similar. As the camera will judge immediately whether it is a correct part, it will shorten the picking time. The AI also recognizes through the camera procedures such as tightening the valves, injecting liquid etc and tells the workers how to do it and displays how many times to do so. In addition, it is also possible to call and talk to workers working in different places, so it will be useful for tasks that require team work, such as checking the work progress of the members.”

“Grace Vision can switch modes according to the worker's level. For newcomers who need detailed instructions, the "operation mode" in which AI always guides is appropriate. Experienced, veterans who can work even without instructions are able to work in "monitoring mode" which is minimum or necessary without guidance. However, since AI records and monitors through the camera even in the state of guidance off, when a veteran worker has a mistake in any chance, AI will point out, so it is safe. With GRACE VISION, even if there is a difference in skill of the workers, constant maintenance quality can always be maintained with induction according to the level. AI also supports creation of laborious reports. For GRACE VISION, you only need to instruct AI to report on the end of work. If you tell AI, data is written to the prepared template, AI verifies based on camera record, and it checks whether there were no mistakes in work. Attachment of images can be easily done through the camera, and the completed report can be sent from the work site immediately. Work supervisor can also instantly receive reports from each worker on Grace Vision and check the contents. In this way, Grace Vision can do what you need at any level and in any language, enabling you to work efficiently, reduce costs, and shorten the learning curve on mastering the technology in operation and maintenance of the product.”

HEROZ Hayashi Tomohiro

Takahira Hayashi 林隆弘 and Tomohiro Takahashi 高橋知裕 of Japan's HEROZ Inc (TSE: 4382)

“HEROZ aims to achieve ‘to bring as many heroes into the world as possible’ by ‘AI x mobile’. HEROZ possesses a unique core technology of world-class artificial intelligence (AI) developed by our top engineers that has defeated professional shogi (Japanese chess) players in public matches developed by our top engineers. HEROZ has accumulated such a machine learning technique through the development of smartphone apps such as ‘Shogi Wars’, ‘CHESS HEROZ’ and ‘BackgammonAce’. Our mobile device is the closest and the most accessible device for everyone anywhere in the world today. We believe that every person has the potential to become a ‘hero’ of a certain kind. HEROZ has been and will continue to build on our concept of ‘heart filled with amazement’ which represents our fundamental thought to provide services that would bring excitement and amazement to everyone rather than simply introducing and applying information technologies.”

“Our MLaaS business model establishes an infrastructure which allows HEORZ to provide comprehensive AI services efficiently to solve various challenges in various industries just by changing input data, while achieving stable, sustained earnings with initial setup fee and recurring ongoing fees and high switching costs since output precision increases through repeated machine learning. Client’s input data are sent to HEROZ Kishin and the output generated after machine learning through deep learning are applied in business settings. Results are measured and used for further machine learning. In addition to fixed recurring ongoing fees, ongoing fees in the form of revenue sharing will be introduced in FY04/2019. HEROZ’s overall marginal profit ratio, defined as ‘(net sales –app commission fees –royalties)/net sales’, improves as the composition of AI B2B services increases. Our marginal profit ratio has increased from 67.6% in FY04/2017 to 76.3% in FY04/2018 and 83.4% in 1H10/2019.”

“HEROZ Kishin (棋神) is a unique AI machine-learning-as-a-service (MLaaS) built from the technology cultivated through the R&D of Shogi AI to solve difficult issues in the real world in a wide range of industries, unlocking the value that data possess and supporting your business expansion. Selected companies our AI technology is provided to include Nomura Securities, Daiwa SMBC, Nikko Securities, Monex, Honda Motor, Takenaka Corporation, The Pokémon Company, BANDAI NAMCO Entertainment (TSE: 7832), Hearts United Group/Digital Hearts (TSE: 3676). HEROZ Kishin includes intellectual game, game development, route optimization, placement optimization, prediction, optimal solution search, classification, abnormality detection, sentence processing, image recognition etc. Various engines are installed, and we customize it according to the issues of each company. By utilizing the company's platform, we can clarify the cause of defective products at the production site, automate system verification in the software industry and respond to the shortage of IT human resources.”

“HEROZ has been working with Takenaka Corporation in the construction industry to create an AI system to help design buildings. The AI system will crunch hundreds of Takenaka’s existing structural design data and learn from its architects to provide various patterns for how buildings could be designed while inheriting the knowhow of craftsmanship. The AI will combine tags and lead to reform of building production system. Architects then compare the patterns and consult with clients to decide which one to use. Takenaka expects to reduce the routine work associated with designing building structures by some 70%, giving its professionals more time to focus on being creative. The ability of designers will also increase when they obtain different ideas from AI. One of the expected effects is to improve work efficiency, but I hope that AI will show a totally different proposal from existing one.”

“HEROZ has also formed a partnership with Digital Hearts to use AI technology for software testing which typically accounts for 20 to 30% of gaming development costs. In the game ‘Pokemon Co-Master’. many Pokemon figures appear and move like shogi pieces. Like the AI help in Shogi Wars, the player’s partner is an AI character who think about how to move to the player’s thought in the game to consider combinations and strategies. Due to the presence of AI, Pokemon Co-Master is finished in a game that many people enjoy, as well as those who prefer the high level of strategy of Pokemon and board games. I believe that AI helps people, sometimes people help AI, and players experience a fighting relationship together with AI as a new way of playing and enjoy it. We will be launching AI CARDDASS, a new digital card game brand developed with Bandai, with the first series titled ZENONZARD smartphone app expected to be released in 2019.”

“In the world of finance, HEROZ has tied up with online brokerage Monex to provide robo-advice for people who trade currencies. The ‘Trade Medical FX’ system analyzes their past performance and transaction style and provides suggestions for investment skill improvement. HEROZ also commenced joint efforts with Sumitomo Mitsui Financial Group and Nikko Securities in AI equity portfolio diagnostic service taking customers’ risk appetite into account and AI stock price watch service with ‘LC-PH’ (loss-cut-profit-hold) strategy. The following services that are promoting practical use are services that enable equity investment based on advanced finance theory and investment method, even for customers with little investment experience, utilizing AI forecasts and trend analysis . It is the first attempt in Japan to provide services utilizing AI stock price prediction for individual customers, and we are also applying for international patents. We aim to offer to customers who have an account at SMBC Nikko Securities in the first half of 2019. HEROZ can successfully crunch the huge amount of data on consumers’ deposit and withdrawal information, and data from social networks, to assist banks when they are making decisions on giving out loans and deciding whether customers are creditworthy. Our AI also helps in abnormal transaction detection in which we learn past transaction information etc. and automatically detect and notify candidates for abnormal / fraudulent transactions.”

“HEROZ aims to be a tech group where excellent AI engineers gather. Engineers account for three-quarters of the 40 members, 70% of which are engaged in developing AI and algorithms. For example, developers of Shogi AI ‘Ponanza’ and ‘Apery’ are from NEC Central Research Laboratory and engineers who published basic theory on Mahjong AI and are regulars in the ‘Supercomputer Contest’. A major feature is that all the engineering teams are in a almost flat relationship. In order for employees to have fun working, we have created an environment where we can express our opinions freely and fully demonstrate our creativity. It is an organization form in which leaders are born for each project. Sony’s Akio Morita also supported genius engineers such as Masaru Ibuka's curiosity and chunk of inquiry and prepared an environment where you can immerse yourself in R&D as much as you like. The climate of SONY respects the pure feeling of engineers who want to please people with technology and innovations that change the world have been born one after another. Environments in which competent human resources can demonstrate themselves sufficiently to compete with your own abilities, and ‘impurities’ such as titles and hierarchical relationships are not mixed. We want to create a company where people can fully demonstrate their 100% ability and can enjoy the work. There is growth of HEROZ when we promote things quickly and value the climate that respects the individual's capabilities. This is the starting point. I think that it is still an endless journey. I want to grow while cherishing the thought that ‘I want to impact society’ and ‘I want to create a service that surprises the world.’”

RPA Takahashi Osumi

Tomomichi Takahashi 高橋知道 and Nobuyuki Osumi 大角暢之 of Japan's RPA Holdings (TSE: 6572)

“Thirty years ago a person who was able to operate a personal computer was considered a hero, but everyone became able to use it like a tool thanks to Bill Gates. After ten years, the Internet became popular and it became another tool which require us to be able to master it. Smartphone appeared ten years later. Initially it was a toy-like device, but due to the increasing sophistication and popularization of app functions, everything including digital wallets entered into smartphone, creating dramatic changes in life. We believe that the spread of RPA and AI will fundamentally change and redefine the structure of many businesses and raise the productivity of white collar workers dramatically in the coming decade. RPA will be a ‘stationery’ which is easily used by anyone without any special knowledge and that every white collar worker will use every day. Everyone can design and create a RPA software robot that matches their business. Then, even if there is a change in the work flow and business rules change from tomorrow, people in the field can change on the spot and respond immediately. The history of productivity revolution using technology is a series of such things when they make it to the level that you can use it like that. RPA will become the reading and writing of the future era. Personal computer, internet, smartphone and RPA will be basic business skills and RPA will be a powerful weapon for many companies. The future of the company and the Japanese economy will change depending on how you use the time of the person who created the RPA software robot. You can devote your free time to designing more efficient business processes, or you can use it for developing new businesses and products with higher added value. What is important is getting the degree of freedom about how to use the time created by productivity improvement.”

“The office work in Japan is individualized for each company, and there are many customized work. So if you try to automate your work using office automation (OA) or business process re-engineering (BPR), it will cost more. Because of this problem, Japan's OA has not progressed so far. To solve this problem, RPA aims to solve with the idea that business flow is analogue and office work can be automated using RPA software robot without changing the flow.”

“As an example, let's consider the case of collecting paper receipts and posting in the accounting department of the company. Until now, information such as the amount stated on the receipt, company name, date of payment, and so on, was input manually to each cell of Excel or ERP accounting system, and a huge amount of work was required. According to the idea of OA conversion in the past, it is said to introduce a system that can exchange payment information online without issuing a paper invoice in the first place, but in Japan such thought did not spread easily. On the other hand, RPA says that it is inevitable to receive a paper receipt itself, and instead it scans the receipt and turns it into OCR, and automates the process of filling each numerical value in the target cell. The idea of such RPA is drawing increasing attention.”

“The difference between Excel Macro and RPA is that In order to assemble a macro, you will need to gather personnel with expertise on macros and do programming work. So with this method, the company has to pay enormous cost to achieve automation and only for a single task. In the case of RPA, on the other hand, by simply pressing the start button, we will automatically record (log) the flow of series of office work actually done by humans and remember it. When you select one step in the flow, there is also a feature that the screen scene is displayed, so it's easy to extend, change and modify. RPA's groundbreaking point is that you can teach the work of human beings directly without relying on programming.”

“It is often said that Japanese people have very good abilities when viewed on an individual level, such as mathematical literacy which ranks high in the world. However, according to the OECD survey, Japan's labor productivity is the lowest in G7. This situation has not changed for a long time. When an excellent individual enters into the organization, he or she cannot demonstrate their ability sooner. The cause is that there are many cumbersome tasks in the company, such as stamping on the form and circulation of the approval note, and individuals are being forced to handle such miscellaneous work, leaving less time to creative work, so productivity does not rise at all. Also, when you get such extra work tasks, those with more free time would slowly go through their existing work and began to pretend to be working hard. Japan's labor productivity can be greatly improved if this miscellaneous affair can be automated. RPA is effective as a breakthrough.”

Minwise Lee

LEE Kyung-min 이경민 of Korea's Minwise (KOSDAQ: 214180)

“The Internet and mobile presented us with an ocean of endless information and tremendous convenience, but at the same time we had to worry about endless information leakage and the inconvenience of remembering more information. The problem we need to solve today is to maximize convenience, but minimize worry and discomfort. In March 2009, Min Angie was born after thinking about 'Is there any way that anyone can use the Internet and mobile without worrying about convenience and security?’ Minwise has also invested in SettleBank, which is the number one virtual bank account settlement services company and is growing further through synergies between Minwise and family of companies. All the services Minwise introduced to the market have a common point of view in terms of providing user's convenience and useful service. This is Minwise's service philosophy. Minwise likes the blue ocean that others have not seen and is pursuing a business with a long life cycle. We look forward to the company as a platform for employees to grow. We are steadily growing based on the fact that we are leading the blue ocean market that drives IT trends for every service we offer and that we have a stable profit structure through a large number of business partners. We look forward to a real leap forward as a convergent IT company providing original services that enriches people’s lives and we will take on social responsibilities as a convergence IT company. I hope you will keep an eye on Minwise's steps to create a better world and we ask for your support and encouragement.”

“Many wonder about the mission of Minwise. 'Min' comes from the last letter of my name, and if you disassemble 'min' one by one, it becomes the abbreviation of 'Mobile Internet Network'. And because it is a knowledge business, it means wisdom is important.”

How to Know If We are Right for Each Other? 

You are an intelligent high net-worth investor, business owner, family office, institutional investor, allocator, or financial advisor who want to:

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  • You want to learn and be well-informed about disruptive forces and innovation, new technologies and new business models coming up, and the companies that ride on and benefit from them in some of the most promising areas of the economy, and feel more confident in your knowledge in how these innovators are indispensable in the well-being of your daily life.
  • Yet, you do not wish to follow the crowd like everyone else to herd in the popular mega-cap tech stocks.
  • And you definitely do not want to fall for the Next-Big-Thing trap by investing in fads, me-too imitators, cash-burning tech companies, or even in seemingly cutting-edge technologies without the ability to monetize and generate recurring revenue with a sustainable and scalable business model, and you want to know how to distinguish between the true innovators and the swarming imitators.
  • You want to be proud of the entrepreneurs and owner-operators running the companies, that they are honorable, high-integrity, far-sighted, and have a higher sense of purpose in solving High-Value Problems for their target customers and society, and have unique, scalable and wide-moat business models with sustainable competitive advantages and innovative products, services, and processes to grow profitably through up/downturns in the economy, as opposed to imagining a certain tech category and then finding someone in that category.

About KB

KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to H.E.R.O., KB was the Portfolio Manager/Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investment.

KB was also the Managing Editor of the Moat Report Asia, a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia. Subscribers to the Moat Report Asia from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, hidden billionaires and savvy private individual investors who are lifelong learners in the art of value investing.

KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Detecting Accounting Fraud in Asia as an official module at the SMU. KB remains grateful to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community.

Selected media archives:
- Scouring Accounting Footnotes to Prevent Tunneling Fraud, Business Times, 19 Aug 2015 (PDF)
- Reforming Corporate Governance, Business Times, 25 Nov 2000 (PDF)
- The Secret to Business Resilience: Be Like the Bamboo, Not the Oak, TODAY, 8 April 2013 (PDF)
- Creating Bamboo Innovators in Singapore, Straits Times, 1 April 2013 (PDF)
- 管理狮城的狮子企业家 The Power of Vision, Business Times, 15 May 2000 & Lianhe Zaobao, 9 Aug 2010 (PDF)
- Why ‘Democracy’ and ‘Drifter’ Firms Can Have Abnormal Returns: The Joint Importance of Corporate Governance and Accounting Quality in Separating Winners from Losers, Review of Social, Economic and Administrative Studies, Vol. 25 no. 1 (2011): 3-55. (PDF)

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Feedback from my students at the Singapore Management University

I am fortunate to have the chance in helping the students to acquire the required technical accounting competencies and sharing with them the importance of sharpening their critical thinking skills and embracing the right values and ethics over the course of my teaching as a full-time faculty member at the School of Accountancy, Singapore Management University.

Some kind feedback from the students include:

  • “I am writing to show my gratitude for Prof Kee Koon Boon for his outstanding teaching. As a graduating student in SMU and through my four years education in SMU, Prof Kee is one of the most passionate and knowledgeable lecturers/professors that SMU has.. I cannot emphasize how important is this module to accounting and finance professionals. There have been widespread media reports on accounting fraud scandals in China-based companies. To put it across bluntly, these reports are ex-post and the harm has been done. What the public needs is ex-ante reports to identify these potential accounting frauds. Despite me getting A+ for Financial Accounting module, Management Accounting module and Corporate Reporting & Financial Analysis module, it never occurred to me to judge the accounting numbers beyond their face value. This module has brought great insights to me through the various methods taught to detect accounting fraud. For SMU to continue producing excellent financial professionals, this module on Accounting Fraud should be expanded to take in a larger amount of students genuinely interested in this subject.”
  • “I was moved into writing this letter of appreciation letter for Professor Kee Koon Boon for his work done for the module Accounting Fraud in Asia. This module.. will undeniably be one of the most useful course SMU undergraduates will find themselves taking.. his exemplary teaching quality and methods will continue to help nurture graduates with an edge who will be highly sought after by corporations. What Prof Kee is teaching is vitally important, because most accounting systems today are focused on post-mortem fraud, investors today are not equipped with the vital skill of fraud detection ex-ante.. His constant encouragement.. shows his deep concern for our core growth and maturity, not just in terms of academic development and technical skills, but also in terms of our character development and desire to do good for society. He is truly an educator and a teacher, in every sense.”
  • “I am touched by your spirit and passion, so keep this teaching style spirit going and impact more students! With that, I would like to thank you for the sharing session from interview to fraud class lessons as well as thank you for leading me in finding the energy of myself.”
  • “Besides the technical skills and knowledge, I think there are other aspects of my life that you "value add" to. For example, how to persevere and be positive, how to "hold on together" so that "our dreams will never die". These are values which other professors will not share. You are one of the most dedicated, hardworking and "on the ball" professors that I have come across.“
  • “I have thoroughly enjoyed your lessons so far. In fact your lessons are something that I look forward to during the week. After working in the hedge fund industry for 8 months last year, I find that it is really rare for someone like you to come out and share your insights and experiences with the world, or even to undergraduates like us without expecting anything in return. I truly admire your spirit and generosity that is similar to that of Benjamin Graham or Bruce Greenwald, reputable masters in their own rights. The learning goes beyond the classroom, and the website is a great tool for students and the general investing public to learn as well. At the end of the day, what really matters is how much value you have added in this world. For that, I believe your work has benefited many of the enthusiastic students in class and have educated investors who are keen to invest in Asia but are looking to arm themselves with background knowledge to finesse their way through the Asian capital jungle.”
  • “Right on the cusp of entering the working world, we are thoroughly grateful to be on this journey with you. And I say this in a continual manner because I’m certain our journey doesn’t end here. Thank you for your generosity in sharing your knowledge with the class. Thank you for your passion in uncovering fraudulent activities for the good of investors and the quest for rightness. Thank you for your being the genuine spirit that you are, truly committing yourself to the noble cause of educating us and leading us along with you in the pursuit wisdom and character.”
  • “There is no thread of doubt that we are learning highly proprietary and beneficial stuff from you and the goodness is beginning to take shape in us slowly. These seeds once sown will grow further with time and I must thank you for showing us to the gates of this new realm and equipping us with the necessary weapons to outlast if not conquer the Asian Capital Jungle eventually. Beyond these, having been through 7.5 semesters with just 5 weeks of SMU life remaining, I must tell you that I count myself really fortunate to have taken your class right before leaving school. I must honestly say that you are the most enthusiastic Prof I’ve met in school and just like the video of the Chinese singer you showed us in class, your great work shines through and has inspired me a lot. Beyond technicalities, it has taught me to be really really thorough in the pursuit for excellence, esp as a young entrant into the financial industry. Your class contains the most practical wisdom compared to other mods in SMU and all this are what ‘true value’ in education really mean.”
  • “Thank you for your passion and guidance during the past 4 months. Through this course, I was able to see the various ways accounting fraud can be perpetuated in Asian society. I indeed have a greater awareness of my own shortcomings and have a clearer sense of direction on which career path I should choose in future - to avoid being swayed towards greed and worldly pleasures but instead lead a life of sufficiency, gratefulness and service.”
  • “Thank you for the effort and dedication in the materials & speakers you have provided for us! I have learnt knowledge that have been picked up from valued experiences from yourself as well as speakers like Mr Hemant Amin, knowledge that I would not be able to amass unless through the course. I am thankful to have taken Accounting Fraud because you have taught us values together with knowledge. A compass that will continue to guide us in our journey.”
  • “The instructor is very dedicated to his job… He also has great experience and insights into current issues and always tries to bring them into context with what we are learning.”
  • “… willing to share his insights into different subject matters and let us think deeper into what is taught to us.”
  • “… a very caring and understanding professor who takes the effort to encourage students - concepts learnt can be readily applicable to the working world”.
  • “… a very responsible and helpful professor who is willing to share his insights to the class. He is also extremely knowledgeable in many aspects and there is a lot to learn from him.”
  • “Prof is very approachable and I’m most impressed by his sincerity and passion in sharing valuable lessons with us.”
  • “Patient, kind, caring and considerate of individual, special needs of students. Always warm and approachable.”
  • “Prof Kee has inspired me with his enthusiasm in learning and the vast knowledge that he possessed. He was very willing to share his wisdom with us and is definitely a great teacher.”
  • “Prof Kee is very friendly prof. He makes an effort to get to know each student and is genuinely interested in the conversations of us students. He is also very knowledgeable and passionate about learning. His sincerity is heartwarming and he is a good role model for students. Thank you Prof Kee!”